Friday, August 20, 2010

The Needs of Pakistan

The tragedy unfolding in Pakistan is mind boggling. Robert Reich discusses why you should be concerned about it:

Flooding there has already stranded 20 million people, more than 10 percent of the population. A fifth of the nation is underwater. More than 3.5 million children are in imminent danger of contracting cholera and acute diarrhea; millions more are in danger of starving if they don’t get help soon. More than 1,500 have already been killed by the floods.

This is a human disaster. It’s also a frightening opening for the Taliban.

There was a time when any global event was framed in terms of communism--we had to do this or that, globally (and expensively) or the Communists would take advantage.

Now we hear that the Swat Valley, Taliban central, is under water. My guess is if the Taliban is underwater, then they are not much of a threat anymore.

Instead, our foreign policy-military archipelago frames it as an opening for the Taliban and a threat to us, which will call for a response in the billions of dollars.

I have no problem is humanitarian aid to anybody anywhere at anytime. Indeed, perhaps that should be the mission of our fantastically expensive foreign policy archipelago (remember we suck money out of the private jobs- and wealth-creating private sector to finance government operations).

If it were up to me, we would pull the troops out of Afghanistan and have them deliver food to Pakistanis, and then leave that part of the globe.

Beware of foreign policy-military types whispering about dangers--read Vietnam, Iraq and Afghanistan. There are always dangers.

You are so right, perspective is everything. I know it is easy for me to get so cautht up in our problems that I lose sight of bigger issues.

I sometimes wonder in terms of value added to the world if all the effort I put into macroeconomics would be better spent focusing on economic development issues. There is no doubt in my mind the Fed's decisions are very important to human welfare here and abroad, but there are so many bigger structural problems facing the world unrelated to monetary policy. (Yes, I know comparative adavantage says I am probably providing more value added as a macro guy, but who is to say what would have happened had I spent all this past years on development economics.)

I just got back from a family vacation where we drove from here to Atlanta. Along the way we stopped at a friend's place in Mississippi (there is only so far one can go with three little children in a packed auto, even with DVD players and all)and was reminded how poor the state is in certain places. Among other things, I had the chance to talk to my friend who hosted us about his students. He teaches at a career college where students are largely from the lowest socioeconomic realms. I asked him if his students were bothered by the fact that the Fed was not doing enough to reduce cyclical unemployment in their state. He burst out laughing saying most had no clue what the Fed is and are more concerned with day-to-day survival given their lot in life. For them structural issues are and have been far more important than monetary policy.

What concerns me is that this human tragedy will lead to another, greater tragedy.. the disillusion of the Pakistani state itself into civil disorder, hunger, mass emigration and perhaps radicalism. I've got a couple Pakistani friends who tell me Pakistan is two nations; half the people despise the Taliban, send their children to school and hope to become an increasingly prosperous nation like India is becoming. The other half are jihadi idiots that beat their wives and train to kill all in the name of their God.

DB: Wasn't it Lucas who said that once he started to think about econ development issues, it was impossible to think about anything else?I don't know how much the non-econ & finance public thinks about the Fed. Among the "laity" it seems in my experience to be mostly computer programmers and engineering folk who are most interested, and they tend to follow the Ron Paul line.

But getting back to the Fed: I wonder if you have seen this interview with former Fed governor Rick Mishkin. If anything underlines how thoroughly corrupted this institution has become, and how worthless any research done there is, this interview will do it:http://www.zerohedge.com/article/watch-former-fed-governor-fred-napoleon-dynamite-mishkin-dire-need-diaper-change

I wouldn't be using this guy's textbook if it was the last thing out there (luckily there are others)